Mining & Trade News

Malawi’s foreign exchange woes which have seen the United States Dollar fetching up to K5,000 on the black market while the official rate in dealer banks remains K1,700 are fueling gold smuggling, Mining & Trade Review has established.

Random interviews with gold dealers and some Artisanal and Small-scale Miners (ASMs), revealed that local gold dealers are preferring to sell their gold to business tycoons in neighboring countries such as Zambia and Mozambique, despite the Export Development Fund (EDF) offering attractive prices locally, because they prefer to trade in Dollar other than the Kwacha.

“The black market is very attractive because of the unstable exchange rate and small-scale miners prefer taking their gold to black market dealers whose prices are based on the Dollar exchange rate on the black market. The dealers export the gold to Mozambique and Zambia in order to sell in US Dollars,” said Chikomeni Manda, Managing Partner for Perekezi ASM Consulting.

In a separate interview, MD for Maleta Gems and Jewels Percy Maleta told Mining and Trade Review that there is a steady market for gold in Malawi with a good number of ASMs selling their gold to EDF.

“Besides EDF, there are other buyers in Lilongwe buying a lot of gold, they also offer attractive prices,” Maleta said.

Currently, gold is trading at an average US$94 per gram on the international market but RBM has been offering $225 per gram (about K390, 000).

But even at such a price, RBM is unable to attract many sellers on account of the volatile exchange rate with the Kwacha fairing badly on the parallel market.

Maleta suggested that in order to fetch more gold from ASMs, EDF needs to capacitate the ASMs by supporting them with equipment and skills.

“EDF should be more than a big vendor by working with cooperatives, capacitate them, and agree to buy output which is gold at agreed prices. It should borrow a leaf from most of the private dealers who go beyond just buying gold, and support ASMs with equipment and skills,” said Maleta.

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